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OCR rate held at 2.25 percent

Radio New Zealand Radio New Zealand 8/06/2016

© Getty Images The Reserve Bank will keep interest rates unchanged at a record low 2.25 percent, it was revealed this morning.

Analysts and financial markets had expected no change to the benchmark rate.

Reserve Bank governor Graeme Wheeler said the domestic economy was robust, with strong migration, tourism and construction activity, as well as low interest rates.

But he said there were still some threats.

Mr Wheeler said the dollar was still too high, given weak global commodity prices, while a surging housing market could undermine the financial system.

While inflation remained low, Mr Wheeler expected it to pick up, underpinned by the low cost of borrowing, rising fuel prices and an eventual fall in the currency.

But he warned the central bank was ready to cut rates further if needed, to ensure inflation back to the desired two percent target.

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